New listings pick up as sellers return, but buyer movement remains tepid

Zillow offers more evidence of thawing lock-in effect

The return of home sellers to the market seems to be gaining traction, although the market they’re coming back remains constrained by affordability issues, according to a recent Zillow report.

New listings from sellers grew 8% from April to May, according to the real estate marketplace’s data. That’s a larger-than-average increase for that time period, bringing new listings to 13% above the historically low levels seen last year.

Year over year, new listings were up 12.6% in May, a stark contrast from the 22.8% drop in new inventory in the same month last year. Among the largest cities in the country, new listings rose the most on an annual basis on the West and in the South; San Diego saw the biggest influx with listings up 32.5% year over year, per Zillow data, followed by Seattle (31.4%), Charlotte (30.4%), Raleigh (29.1%) and San Francisco (29.0%).

Overall inventory grew largest year over year in Florida, which contains four of the five cities where total listings increased the most: Tampa (where inventory rose 60.6% compared to May 2023), Orlando (49.9%), Jacksonville (45.6%) and Miami (43.5%). San Diego (44.4%) joined the four Sunshine State cities in the top five.

Total inventory still remains 34% below pre-pandemic levels, according to Zillow’s numbers, but that’s the narrowest the gap has been in over three years.

“[The lock-in effect’s] hold seems to be loosening — homeowners who may have put off listing their homes are done waiting,” said Orphe Divounguy, Zillow senior economist. “But just as more choices sprang up for sale, buyers turned on cruise control.

“Inflation has hit younger households hardest, and stubbornly high rates have pushed a mortgage out of reach for many first-time buyers. That has cooled competition for houses. If these trends hold, we’re likely to see price growth flatten or tick down over the next year.”

Indeed, new listings outpaced home sales in May, letting competition and price growth both soften. The increase in typical home values cooled off from 4.4% annually in April to 3.9% in May. Monthly price appreciation was also down, from 1.2% in April to 0.8% last month. And 23.9% of homes on the market saw a price cut in May, the largest share for May in more than six years.


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